UK house prices fall 0.6% in October, sharpest monthly drop in a year

British house prices fell 0.6% in October, the steepest monthly decline in at least a year, taking annual price growth to minus 1.2%, its weakest since October 2023, as renewed inflation kept borrowing costs high and weighed on demand, Lloyds said on Friday.

The average UK property price fell to £296,285 from £298,167 in September, according to the Lloyds House Price Index.

Prices had declined 0.1% in September and fell 0.5% in the three months to October compared with the preceding three months.

Lloyds Mortgages Director Andrew Asaam said housing demand "is currently being tested by a challenging economic backdrop.” 

Renewed inflationary pressures, driven in part by the conflict in the Middle East, were keeping borrowing costs high and squeezing household finances, making some buyers "understandably more cautious", he said.

Asaam said conditions were likely to remain subdued in the near term, but Lloyds did not expect a sustained period of falling prices, with wages continuing to rise faster than property prices.

Greater London recorded the steepest annual decline among UK regions, with prices falling 3.1% to £524,892. The South East and South West both recorded annual declines of 2.4%, to £379,258 and £298,057, respectively.

Northern Ireland again recorded the strongest annual price growth, with prices rising 4.4% to £228,708, although growth slowed from 6.9% in September. Scotland recorded a 2.8% increase to £222,667, while Wales rose 1.6% to £233,116.

In England, prices rose 2.2% in the North West to £249,916 and 2.0% in the North East to £184,318. The West Midlands was the only other English region to record annual growth, with prices up 0.3% to £261,656.

UK home sales fell 0.5% in September to 94,800 on a seasonally adjusted basis and were 3.6% lower than in September 2025, according to provisional HMRC estimates.

Bank of England data showed mortgage approvals for house purchases fell 2.5% in September from August to 53,443, down 19.4% from a year earlier.

The Royal Institution of Chartered Surveyors said its net balance for new buyer enquiries weakened to minus 22% in September from minus 18% in August, while agreed sales slipped to minus 18% from minus 16%.

New instructions rose to a net balance of 6%, the first positive reading since mid-2025.